Rural Marketing – An Introduction

The concept ‘Rural’ and ‘Marketing’, though used very frequently in various forums, have eluded any precise and non- controversial definitions. When we join them, the resulting concept ‘Rural Marketing’ means different things to different persons. This confusion leads to distorted understanding of the problems of rural marketing poor diagnosis and, more often than not, poor prescriptions.

The rural market in India is not a separate entity in itself and it is highly influenced by the sociological and behavioral factors operating in the country. The rural population in India accounts for around 627 million, which is exactly 74.3 percent of the total population.

The rural markets in India are undergoing a silent but definite revolution in terms of vastly enhanced purchasing power, consumption priorities and overall volume of consumption of goods and services. The sheer size of the market, as large sections of rural population get converted into consumers, is enough to demand focused attention from both marketing practitioners and academics, to convert the emergent opportunity into realizable market shares and growth targets.

The underlying reasons for undertaking specific efforts to understand marketing practices and to evolve a suitable framework for developing appropriate marketing strategy for the rural India have their basis in two major developments.

The first is that on account of rising purchasing power in the rural India, corporate sector is discovering the huge potential that must be realized by creating access and focusing marketing efforts in the rural segment.

The second reason is that rural markets and the rural consumers are different enough to demand differential marketing effort and it is important for you to be able to understand these differences as well as the marketing implications that flow from them.

The government of India only defines a non-urban market. If we go by statistics, roughly around 70% of the Indian population lives in the rural areas. That’s almost 12% of the world population. The Census defines urban India as – “All the places that fall within the administrative limits of a municipal corporation, municipality, cantonment board etc or have a population of at least 5,000 and have at least 75 per cent male working population in outside the primary sector and have a population density of at least 400 per square kilometer. Rural India, on the other hand, comprises all places that are not urban!”

The Indian rural market with its vast size and heterogeneous demand base offers great lucrative opportunities to marketers. After all, two thirds of countries consumers live in rural areas and almost half of the national income is generated in the rural hinterland. India is classified into around 450 districts, and approximately 6,30,000 villages, which can be segmented in different parameters such as literacy levels, accessibility, distribution networks, income levels, market penetration, distances from nearest towns, etc. Recent developments, which has taken place in the rural areas under the five- year plans and other such special programs, are phenomenal. The overall growth of the economy has resulted into substantial increase in the purchasing power of the rural communities.

Some simple facts to support this: In 2010, LIC sold 55% of its policies to rural areas; of over two billion BSNL mobile connections 50% are in small towns or villages; 41 million Kisan Credit cards have been issued as against 22 million credit cum debit cards in urban areas. With the growing market and the growing purchasing power it is therefore natural that rural markets form an important part of the total market of India.

There is an immense opportunity for the marketer to create innovative and creative solutions to tap the rural potential. As per CK Prahlad ‘Improving the lives of billions at the bottom of economic pyramid is a noble endeavor. It can also be a lucrative one.’

Rural Marketing – Definition

Rural marketing can be defined in terms of the location (villages) and occupation (mainly farming). A large variety of transactions are considered a part of rural marketing. These are marketing of:

  1. Agricultural inputs like fertilizers. Pesticides, farm equipment.
  2. Products made in urban centers and sold to rural areas like soaps, toothpastes, TVs etc.
  3. Products made in rural areas sold to urban centers like khadi cloth, handcrafted products etc.
  4. Products made and sold in rural areas like milk and milk products. Locally manufactured toothpowder, cloth etc.
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